longoil

Five Oil and Gas Trust Picks

Brian,

The negative effect of the future tax rate was factored into income trusts immediately after the announcement of the new tax rate for income trusts on Oct 31, 2006. ERF lost $20 instantly from a peak in the mid-$60's in July 2006 (with crude oil in the mid-$60) and has never risen above $50 (in spite of $135 oil).

I am on a personal mission to make sure the Canadian conservative party pays for this Halloween surprise. I make it a point to tell all the seniors citizens I meet how their retirement funds have suffered significantly under Tory rule. Seniors are the most likely group to own income trusts and have a superb attendence record at the voting booth.

The problem at the time was the conservative party was trying to prevent badly run companies (like Bell Canada and Telus) from converting to income trusts to minimize their tax liability. They unfortunately decide to punish all existing income trusts in one swoop(including energy companies in Alberta that have created a plethora of high paying jobs for not only Alberta citizens, but for countless citizens of many economically depressed regions in Canada).


On Jun 06 11:58 AM Brian27 wrote:

> Six months ago the trusts were a bargain. The Canadian government
> wants to reduce the corporate tax rate so the impact of trust convervison
> to corporation will be mitigated a bit.
>
> But one has to value the trusts using the future corporate tax rate
> prevalent in 2011. Certainly, net income, cash flow and dividends
> will be lowered significantly. One should expect that alot of trusts
> will be bought out as 2011 approaches and the tax pools are used
> up, as the reason for their existence (tax shelter) will be gone.